Netflix gives its side of the story

Commentary: Says price increase was well communicated

HerbGreenberg

Heard from Netflix
NFLX, -3.99%
this morning following two items here about the company's lack of mentioning a looming 10 percent price increase to people signing up for a free trial.

A spokeswoman sent a copy of an e-mail that she says she sent last week in response to my questions; apparently it went to the only email address she had, which isn't my address at MarketWatch.

She says: "Our priority has been to communicate the price increase as broadly and as clearly as possible. The two most important areas were: immediate communication with all members, which was accomplished by e-mail the day the increase was announced and; in the sign-up flow on the web site.

"Moreover, we wanted to provide members ample time to adjust to the increase, which is why it won't take affect until 60 days after the announcement, on June 15.

"Because of that, there are areas of the website on which it is still important, for maximum clarity, to communicate the $19.95 price. For example, anyone signing up for a free trial between now and June 2, if they remain members at the conclusion of the trial, will be billed at the previous rate of $19.95."

I then asked her to clarify how long people on free trials will be billed at the old rate.

"If you sign up for service between now and June 2 your first month's bill will be at the $19.95 price, because that price doesn't change until June 15. (In other words, if you sign up for service between now and June 2, your billing cycle will begin 2 weeks after registration, prior to June 15.) If you sign up for service (and the 2 week free trial) after June 2, your first bill will be at the new price point, $21.99. All references to the $19.95 price will change June 2."

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